Sprint, Dish to test wireless broadband service in Texas

People talk on their cell phones as passers-by walk past a Sprint store in New York, October 15, 2012. REUTERS/Keith Bedford

(Reuters) - Wireless service provider Sprint Corp and satellite television company Dish Network Corp said they will jointly develop a trial wireless service in Texas, in an apparent sign of improving relations between the companies.

Dish has been seeking a partnership with an established mobile operator to help it enter the wireless market. However, its efforts earlier this year to buy Sprint failed after a bitter public battle with Japan's SoftBank Corp, now the owner of 80 percent of Sprint.

Investors have been anxious to see a concrete wireless plan from Dish and analysts see Sprint and T-Mobile US as the most likely candidates for a partnership if only Dish Chairman Charlie Ergen can reach an agreement.

"While the press release does not announce a huge event, the fact these two parties have come together in some sort of partnership speaks loudly given their spotted (and at times acrimonious) history," Wells Fargo analyst Jennifer Fritzsche said in a research note.

Dish, which has spent about $3 billion on wireless airwaves and is looking to buy more, declined to say if the trial could lead to a bigger agreement.

Dish could potentially save billions of dollars if it puts its spectrum to use on an existing operators network rather than starting network construction from scratch.

Sprint, for its part, has long said it would be open to network sharing with other companies, including Dish, if it could reach a deal that makes sense.

While Fritzsche saw Tuesday's announcement as good news for Sprint, it only involved a limited fixed wireless service using Sprint's airwaves and Dish equipment.

The service will only be available in areas of Corpus Christi, Texas, in the middle of 2014 but the companies said they expect it to expand into other markets.

Dish said it would install either an outdoor router or indoor equipment for the service, and use a high-speed technology Sprint is putting in its own network.

Fritzsche said the agreement was good news for Sprint, which gained a lot of extra wireless capacity after its buyout earlier this year of Clearwire, a large spectrum holder.

Sprint shares were up 3.6 percent to $8.61 in afternoon trade on the New York Stock Exchange, while Dish stock was up 2.6 percent to $55.02 on Nasdaq.